LinkedIn: Social Media Stock or a Play on Rising Employment?

While LinkedIn is typically grouped in with other social networking sites, the company could be poised to become a major force in job recruitment.

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When investors consider the market for social media stocks, there are many to consider. Google (GOOG) is trying to crack into the field with Google+, Renren (RENN) dominates the market in China, and the entire world is atwitter (so to speak) over the upcoming IPO of Facebook. One stock that's often lumped in with Facebook and the others is LinkedIn (LNKD). Despite being considered a social networking company, LinkedIn may actually be primarily a recruiting website that directly competes with sites like Monster.com (MWW).

LinkedIn Goes to War with Monster

While it may have flown under the radar at the time, the decision by LinkedIn to block API access to its site for BranchOut and Monster's new social media platform BeKnown in early July of last year may have represented a more significant development than many realized. While LinkedIn is typically grouped in with Google+ and Facebook, the move to stop sharing services with other recruiting sites could be a sign of the company's strategy. LinkedIn appears to be poised to become a major force in job recruitment. At the time, representatives from Monster were upset.

"We are surprised and disappointed by LinkedIn's decision, which we believe not only goes against the interests of LinkedIn users, but also contradicts what LinkedIn claims to stand for - openness and connectivity," Monster reps said in a statement. "Professional networkers are social in nature and LinkedIn has just limited their ability to connect when and where they want. They've taken away users' rights to control how and when they can share their own profile data and personal contacts. We also note that it was within days of Monster's launch of BeKnown that LinkedIn decided to block the API when there have been other networking-oriented apps using the API for months."

However, Monster's cry for more openness may be rooted in a more materialistic desire. Monster's outlook for the future could be seriously hurt if LinkedIn translates its popularity as a social networking site into a new entity in the online job-recruitment segment.

Earnings Statement Shows LinkedIn Making Money

LinkedIn's solid earnings statement led to a nearly 18% jump in share price on Friday, showing that the company might have what it takes to move into consistent profitability in the future. While the solid report was driven by a variety of bullish numbers, including a 105% year-over-year increase in revenues, the most intriguing figure may have been from LinkedIn's new corporate recruiting tool.

"But the real story is the huge jump in revenues from LinkedIn's recruiting services ("Hiring Solutions")," said Josh Bersin writing for Forbes. "Revenues in this segment grew by 136% to $84.9 million, making the company the fastest growing public provider of corporate recruiting solutions. To give you a sense of how dramatic this is: LinkedIn's recruiting revenues are now greater than Taleo's (which was just acquired by Oracle for $1.9 billion) and within the year could reach the size of Monster.com."

LinkedIn offers a variety of recruiting services and appears to have discovered that there's increased revenue in going after the same business that Monster and others depend on. While LinkedIn began as a social networking site, it appears that Monster and others could believe that its future may lead elsewhere.This article was written by Joel Anderson.